Bottom Dollar?

Whether the U.S. dollar is weak in an absolute sense is up for
interpretation. But there's no question that it's a lot
less muscular than it was a few years ago. And it's likely to
get weaker yet, as Asian countries that have been protecting the
U.S. currency--to boost their own exports--will eventually have to
back off. In this environment, imported goods become more expensive
while American exports become cheaper abroad. Over time, U.S.
interest rates also move higher.

What does that mean for your business? If your competition is
primarily international, a weakening dollar is nirvana. Whether you
actually sell your product in this country or abroad doesn't
matter. Relative to those international competitors, you're in
better shape. On the other hand, if you import goods and sell them
domestically--retailing, for example--then you might find yourself
on the pointy end of that particular stick.

"If you're competing with overseas companies or selling
overseas, you'll like this," says David Wyss, chief
economist at Standard & Poor's Corp. "If you're
importing stuff from overseas, you might want to look around to see
if you can get it cheaper somewhere else."

Hedging isn't practical for most small companies. If you
can't keep costs down by finding U.S. sources for products you
normally buy internationally, you might eventually have to bite the
bullet and pass the costs along to customers. But take heart, Wyss
says. "All your competitors' costs are going up,
too," he says. "Once everybody's costs are up,
there's no choice [but to hike prices]."